Small and medium-sized enterprises (SMEs) recently got a shot in the arm after the release of a special program to support them in technological innovation, through a governmental financing guarantee system.

China's Ministry of Finance, Ministry of Science and Technology, Ministry of Industry and Information Technology, and the National Financial Regulatory Administration are all involved in the program.

The program aims to increase risk-sharing and compensation for SMEs specializing in sci-tech innovation. It seeks to boost the motivation and capability of local governmental financing guarantee and re-guarantee institutions, and guide banks to increase financial support for these SMEs.

According to the program, the support covers a wide range of SMEs in their different growth stages, including those being listed in the national information database of technology-oriented SMEs, high-tech SMEs recognized by provincial authorities, and the "little giant" enterprises (SMEs that specialize in niche sectors) with strong innovation capabilities.

Additionally, those engaged in national scientific projects, and those whose sci-tech achievements are in the commercialization phase are also eligible.

Under the program, banks and the governmental financing guarantee systems will share risk responsibilities at no less than 20 percent and no more than 80 percent of the loan amount respectively. The risk-sharing ratio of the financing guarantee fund will increase from 20 percent to a maximum of 40 percent.

The program also raises the maximum guarantee balance per technology-oriented SME from 10 million RMB to up to 30 million RMB. Financial institutions are encouraged to implement differentiated guarantee fee rates based on different risk levels and qualifications of business entities.

The program further specifies an appropriate increase in the compensation limits for the financing guarantee fund and provincial re-guarantee institutions. It encourages capable governmental financing guarantee and re-guarantee institutions to explore linkage models between technological innovation guarantees and equity investment institutions, thereby mobilizing various financial capital and social investments to provide full-life cycle sci-tech financial services for technology-oriented enterprises.

Banks are also urged to develop financing products suitable for technology-oriented SMEs, such as intellectual property pledge financing and innovation credit-related financing, so as to alleviate the shortage of traditional collateral for these SMEs and improve their access to loans.